SJW Group (SJW, Financial), a leading U.S. water utility services holding company, released its 8-K filing on October 28, 2024, reporting robust financial results for the third quarter ended September 30, 2024. The company, which operates primarily in California and other states, focuses on water utility services and real estate services.
Performance Overview
SJW Group reported a GAAP diluted earnings per share (EPS) of $1.17 for the third quarter, surpassing the analyst estimate of $1.15. The adjusted diluted EPS (non-GAAP) was $1.18, reflecting a year-over-year increase of $0.05. The company's operating revenue for the quarter was $225.1 million, exceeding the estimated $213.50 million, driven by rate increases primarily in California and Connecticut.
Strategic Investments and Achievements
The company invested $252 million in infrastructure through the third quarter, representing approximately 76% of its 2024 capital budget. This investment is crucial for maintaining and expanding its water supply and infrastructure, ensuring reliable service to its 1.6 million customers. SJW Group also filed a settlement agreement with the California Public Utilities Commission, which is expected to facilitate significant investments in drinking water infrastructure over the next three years.
Financial Statements and Key Metrics
Net income for the quarter was $38.7 million, a 7% increase from the previous year. Operating expenses rose by 12% to $166.7 million, primarily due to higher water production expenses and maintenance costs. The effective income tax rate decreased to 5% from 11% in the previous year, benefiting from a tax accounting method change.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Operating Revenue | $225.1 million | $204.8 million |
| Net Income | $38.7 million | $36.2 million |
| GAAP Diluted EPS | $1.17 | $1.13 |
| Adjusted Diluted EPS (non-GAAP) | $1.18 | $1.13 |
Analysis and Outlook
SJW Group's performance underscores its strategic focus on infrastructure investment and regulatory engagement, which are vital for sustaining growth in the regulated utilities sector. The company's ability to exceed earnings expectations and secure favorable regulatory outcomes positions it well for future growth. However, challenges such as drought conditions in Texas, which may impact revenue, and rising operational costs, remain areas to monitor.
We are pleased with our financial results for the quarter, which demonstrate the benefits of our national platform combined with the strength of our local water utility operations," stated SJW Group Chair, CEO, and President Eric W. Thornburg.
Overall, SJW Group's strategic investments and regulatory achievements highlight its commitment to providing high-quality water services while navigating industry challenges. The company's financial health and operational strategies continue to make it an attractive consideration for value investors in the utilities sector.
Explore the complete 8-K earnings release (here) from SJW Group for further details.
